Why does everything feel more expensive than it used to?

1980s→Market

Financialization accelerates

Banking deregulation, growth of capital markets, shareholder primacy, and the rising share of finance in the economy. Household debt and asset prices become central to how people experience “the economy.”

1979–82Policy

Volcker shock

Fed Chair Paul Volcker raises rates aggressively to break inflation. Unemployment spikes; inflation eventually falls. The episode reshapes how Americans think about the Fed’s power.

1973Event

Bretton Woods formally collapses

Major currencies float. Oil shocks hit. Inflation and stagnation (“stagflation”) become the political and economic crisis of the decade.

1971Policy

Nixon closes the gold window

The U.S. ends dollar convertibility into gold for foreign official holders. Bretton Woods unravels; the era of floating exchange rates begins.

Nuance This was a major regime change for global money — but it was not the single cause of 1970s inflation.

mid-1960sMarket

Great Inflation begins (as the Fed itself dates it)

U.S. inflation starts rising well before the end of dollar–gold convertibility. Fiscal pressure from Vietnam and Great Society spending, monetary policy choices, and later energy shocks all matter.

Nuance It is too simple to say “inflation started because we left the gold standard.” The Fed’s own history places the Great Inflation’s start in the mid-1960s — before the 1971 Nixon shock.

1944Policy

Bretton Woods

Allied governments design a postwar monetary order: currencies pegged to the dollar, the dollar convertible to gold for foreign governments. The IMF and World Bank are born.

1913Institution

Federal Reserve created

Congress creates the Federal Reserve System as the U.S. central bank after a run of banking panics. It becomes the institution that sets key interest rates and steers monetary policy.